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March 12, 2007
Americans Spend Less Time Reviewing Employee Benefits than Managing Their Taxes and Preparing for the Holidays
Inadequate Preparation Contributes to Consumer Over- Confidence and Widespread Confusion about Workplace Coverage Including:
False Beliefs that Group Coverage is Usually More Expensive than Individual Insurance and Requires Medical Examinations
| For media inquiries, contact:
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Jennifer McClellan
Manning Selvage & Lee
Tel: 212.468.3554
Fax: 212.468.3654
Jennifer.McClellan@mslpr.com
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| Anayo Afolabi
The Guardian Life Insurance Company of America
Tel: 212.598.8329
Fax: 212.919.2790
anayo_afolabi@glic.com
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New York, March 12, 2007 — According to research released today by The Guardian Life Insurance Company (Guardian), almost half of working Americans spend either no time or less than an hour reviewing their benefits each year. The study, Benefits and Behavior: Spotlight on Group Life and Disability Insurance, also revealed widespread misunderstandings about workplace benefits, particularly about the underwriting and cost of group benefits.
On average, respondents said they spent (or will spend)
 | 1.4 hours reviewing benefits this past year |
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By contrast, survey respondents said they spent (or will spend) an average of
| 2.8 hours preparing or filing their taxes |
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| 4.9 hours on holiday shopping |
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| 2.7 hours preparing for Thanksgiving |
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"We conducted the survey at the end of the workplace open-enrollment season, a time of year when the review and selection of benefits would reasonably be top-of-mind," said Craig Guiffre, vice president, Group Life and Disability, Guardian. "But the results show that benefits decisions still take a backseat to other types of planning and preparation such as holiday shopping and filing for taxes."
| Some 71 percent of survey respondents said it is "easy" or "very easy" to select their employee benefits, while only 21 percent say it is "difficult" or "very difficult." |
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Added Guiffre, "We always look for ways to streamline the benefits selection process and we don't want employees to be overwhelmed when they select their benefits. But given the realities facing today's workers, with greater personal responsibility for financial decisions, they need to do their homework and devote several hours each year to reviewing their employee benefits and managing their finances."
Consumer Over-Confidence
The study shows that many people do not understand the basic advantages of group products such as relaxed underwriting requirements, yet they mistakenly believe that they know the difference between group and individual coverage.
| Seventy percent of the employees surveyed said they know the difference between group and individual life insurance coverage. Yet, almost half of these employees indicated that they believe a medical examination is generally required to purchase group life insurance. In fact, such a checkup is typically not required. |
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"Consumers are overconfident about their knowledge," said Guiffre. "Employees need to make informed decisions to insure that their workplace coverage complements their individual coverage. It isn't ideal when people are either over-insured or under-insured. If they are under-insured then they are potentially exposing themselves to unnecessary hardship. If they are over-insured then they are not maximizing their resources."
Disability Insurance: A Bigger Mystery
Disability insurance was less widespread than life insurance, and so was knowledge about disability coverage. Disability insurance is more often acquired through an employer and is less frequently purchased directly by individuals than is life insurance.
| More than 35 percent of those whose employers offer disability insurance, however, did not know how much coverage they have. Similarly, 27% of respondents who have disability coverage did not know what percentage of their income is protected. |
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| What's more, nearly two-thirds of respondents said they feel they understand the differences between group and individual coverage, but almost half believed that a medical examination is required for group disability coverage. For group disability coverage, as in the case of group life insurance, medical examinations are generally not required. In addition, 24 percent of respondents indicated that they believe group disability insurance is more expensive than individual policies, but, in fact, most group policies are less expensive. |
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| The survey also found that as many as 48% of respondents don't realize that employer-paid disability income benefits are taxable. |
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Guiffre cautions, "It is disturbing that nearly half of U.S. employees do not realize that Uncle Sam may take away a portion of their disability check. This can be a shock to an employee who is trying to recover and survive on a reduced income. Understanding how benefits are taxed is critical for employees. It is likely that more employees would supplement their insurance with a voluntary group policy, an individual policy, or max out their group coverage if they had a better understanding about how benefits are taxed."
Time Out for Benefits
| Employees indicated that they consulted a variety of sources prior to making any decisions about their benefits each year. These included reading the literature provided by employers (50%); talking to their employer's Human Resources or Personnel Department (42%); meeting with benefit advisors (36%); and discussing choices with family members (45%).
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Guiffre concludes, "The best time to begin planning is now and throughout the year, not just at the height of open-enrollment season. Employees should subscribe to personal finance publications, read articles, meet with advisors, talk with their families and read the benefits brochures that their employers distribute. All of these activities will take significantly more than one hour each year."
Guardian is celebrating the 50th anniversary of its Group employee benefit business. In honor of this milestone the company will issue a series of educational surveys and reports to help employees, employers and benefit decision makers better understand how they can jumpstart their financial lives, improve recruitment, retention and employee satisfaction by maximizing the use and power of their workplace coverage. The first report released in the series is entitled, Benefits & Behavior: Spotlight on Dental. The report can be found at www.GuardianDental.com
The Opinion Research Corporation of Princeton, New Jersey conducted the survey for Guardian. The survey sample consists of 532 individuals who are at least 18 years of age and who said that were employed either full or part time. They were interviewed by telephone during December 2006. The margin of error was plus or minus two percentage points at the 95% confidence level.
About Guardian
Founded in 1860, The Guardian Life Insurance Company of America, New York, NY (Guardian) is one of the largest mutual life insurance companies in the United States. As of December 31, 2005, Guardian and its subsidiaries had $36.9 billion in assets (on a consolidated statutory basis). With more than 5,000 employees and 3,000 financial representatives, as well as over 85 agencies nationwide, Guardian and its subsidiaries protect individuals, businesses, and their employees with life, disability, health, long-term care, and dental insurance products, and offer 401(k), financial products and trust services. More information about Guardian can be obtained at: www.guardianlife.com.
About Opinion Research
Founded in 1938, Opinion Research Corporation has been an industry innovator for nearly 70 years, delivering actionable insights to solve the toughest market research challenges of clients worldwide. The company conducts commercial market research programs as Opinion Research Corporation in the US and as ORC International outside the US. It also operates ORC Macro, a subsidiary specializing in social research programs for government agencies.
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